Robots don’t have to win: Michigan has what it takes to create jobs

john austin

John Austin is director of the Michigan Economic Center and a nonresident senior fellow with the Brookings Institution. He is the former president of the Michigan State Board of Education.

Despite a low unemployment rate and the rebound of our state’s auto industry, anxiety and unease around how to find good paying jobs is palpable. Our state played a key role in sending Donald Trump to the White House, in part because he tapped the deep pride and nostalgia for a time we didn’t have these worries—when Michigan was America’s jobs and economy leader.

One hundred years ago Michigan was that era’s Silicon Valley. Here, inspired tinkerers and immigrant entrepreneurs built the prototypes and created the processes that launched America’s economic dominance of the 20th Century. We put the world on wheels, invented assembly line manufacturing, created whole new products and industries making cars, chemicals, cereals, machinery, furniture, appliances and retail stores.

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Today, as our inboxes and twitter feeds fill with reports of the growing digitization of our economy, robots displacing people, the unanswered question is: Where are the new jobs to replace the hundreds of thousands lost to automation and global competitors in Michigan’s great industries? This is an urgent political question as well. The nation’s eyes in 2018 will be on Michigan and our election, particularly for Governor, to see if there is a message about creating jobs and new economic opportunity that “trumps” that of nostalgia and inevitably hollow promises to bring back the past.

How Michigan can create new businesses and jobs in today’s emerging sectors is the subject of our new Michigan Economic Center report: Jobs, Michigan, and Leadership in the Economy of Tomorrow.

On par with the industrial revolution in which Michigan played a starring role, today’s economic transformation centers on solving the world’s problems around living sustainably: How to meet the needs of a fast-growing, urbanizing population for energy, clean water, transportation, food, health care, information and connectivity.

The size of world market opportunities in these fast-growing “green”, “blue” and high-social-impact sectors is staggering: energy solutions ($1.35 trillion), water solutions ($1 trillion), food ($5 trillion), transportation ($7.5 trillion), IT ($3.8 trillion), health and well-being (20 percent of the U.S. economy).

As detailed in the new report: In each of these sectors Michigan is one of the few places that has innovation assets which, if harnessed and built upon, can create new jobs and businesses as part of this revolution.

In meeting food needs we have the 2nd most diverse agricultural sector and are a top 10 state in 56 food categories, exporting $3 billion in food products annually, supported by the world’s leading agricultural research and innovation center (MSU). In clean energy, Ann Arbor is number one in the U.S. and Metro Detroit is among the top 10 for clean-tech innovations per capita. Michigan ranks 9th in the nation in clean energy from biomass, and among top states for wind and solar potential. U-M and MSU are national leaders in clean energy R&D, and our iconic firms Ford, Dow, Steelcase and Whirlpool are international energy efficiency pioneers.

In health solutions we rank in the Top 10 nationally in Life Science Innovation capacity, 13th in the number of bioscience firms, 1st among university clusters in educating doctors, and 8th in bioscience degrees conferred. Over 533,000 Michiganders (1 in 8) work in health-related jobs which have been growing, even during the recession.

More than 400 water technology firms, nine University Water Research Centers and 20 Community college water technical training programs make Michigan a world center of water-problem-solving and talent generation. Roughly 11,000 inland lakes and 3,400 miles of Great Lakes shoreline provide more access to water and opportunity to revitalize communities’ “blue economies” than any other state.

In transportation, Southeast Michigan remains the world center of U.S. and foreign auto-related research, design, testing and prototyping; including autonomous vehicles — even as Detroit automakers move to become diversified mobility solutions companies. We are home to nation-leading centers of transportation research, the American Center for Mobility at Willow Run and MCity at the University of Michigan.

Less well known and appreciated, Michigan is also a leader in information technology: the center of development of Internet 1 (and now 2 and 3); the digitization of world libraries, and home to MIDAS, one of the world’s leading Big Data research centers.

Our universities’ produce large shares of computer engineering graduates: U-M in top 10, Michigan Tech and U-M Dearborn in the Top 50. Michigan universities’ Top 10-ranked schools in information, engineering, computers and social sciences are home to the nation’s experts in developing new communications platform technologies (as used by Uber, Airbnb) and analyzing natural data sets (like the world’s Twitter and Facebook feeds). Tech startups make up 40 percent of startups emerging from the over $2 billion dollars of research at our universities, and include success stories such as Menlo Innovations and now Duo Security (a “unicorn”, or billion dollar startup).

In every fast growing sector linked to solving the world’s big challenges, Michigan can show the way. We have the economic horsepower in the form of engineering know-how and the exemplary work ethic of our people, the innovation abilities in our companies and our world-leading colleges and universities.

As Michigan once led the way, birthing whole new industries, Michigan can lead again, solving the world’s big problems and pioneering innovations that positively impact society. This won’t happen magically, however. We need clear vision, state and local leadership and public policies that power innovation, business and job creation. The report makes five recommendations to unleash Michigan’s innovation potential:

  • Repurpose $20 million in existing state economic development dollars spent chasing out-of-state employers to leverage over a $1 billion dollars in new private and VC investment to translate homegrown innovations, new technologies and business ideas from Michigan’s universities, companies and entrepreneurs into new companies and jobs.
  • Facilitate corporate-university public-private partnerships in emerging sectors to identify and develop necessary technologies to bolster competitive profile of our current companies, and create new startups;
  • Support the buildout of Michigan University Centers of Excellence in water, food, energy, mobility, IT and health care to make Michigan the global center of innovation, new technology and business creation in these fields
  • The state and Michigan communities should set ambitious goals for Michigan’s leadership in the emerging economy to stimulate market-driven private sector response, job, and business creation.
  • Make potential polluters pay for expanded Pure Michigan funding and “green and Blue” community placemaking by lifting caps and broadening uses of current Natural Resources and Community Development funds.

As Michigan led the last economic transformation, it can lead the next ‒ doing the work that once again reshapes the world, difference-making work that our kids want to do and that will keep them here in Michigan. The path to more and better jobs and a brighter Michigan future lies forward, not backward.

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Pamela Nelson
Thu, 01/11/2018 - 9:22am

When my daughter and I visited London a few years ago, we could go outside at night--walk from our hotel to the British Museum at midnight--and feel safe because there are cameras everywhere. I would suggest studying the places in the world where 24-hour surveillance is keeping criminals off the public streets.

Chuck Fellows
Thu, 01/11/2018 - 10:05am - sign up, be a sponsor or a participant. Support vocational education starting in middle school. Get pure "Academics" out of the way, let those with kin-esthetic, tactile and visual intelligence exercise their abilities.

Kevin Grand
Thu, 01/11/2018 - 1:37pm

"One hundred years ago Michigan was that era’s Silicon Valley. Here, inspired tinkerers and immigrant entrepreneurs built the prototypes and created the processes that launched America’s economic dominance of the 20th Century. We put the world on wheels, invented assembly line manufacturing, created whole new products and industries making cars, chemicals, cereals, machinery, furniture, appliances and retail stores."

All true.

And you know what we DIDN'T have back then?

Mounds of regulations and legions of bureaucrats telling the likes of Chrysler, Durant and Ford not only how they should run those businesses, but to ask for permission from those same bureaucrats before they can build them up.

When businesses need to hire staff solely to ensure that they are compliant with government regulations (many of which it had no business getting involved with in the first place), the resources spend to retain and keep them updated cannot be spent growing that business.

So the fundamental choice here is: Do we want to allow business to grow so that it can employ people which ultimately produces something tangible and helps the overall economy in general, or do we want to keep someone on the government dole for the sake of providing them with a sense of superiority and a steady paycheck?

Thu, 01/11/2018 - 4:35pm

And this is exactly why Donald Trump is now the President, that we are experiencing 3+% GDP rise, and the stock market is enjoying record numbers. Oh, and the tax thing, despite the media portraying that it will all go to the 1%ers, we now see many companies giving 4 figure bonus checks to employees based on their tax savings.

p gersmehl
Sat, 01/13/2018 - 10:38pm

Do some math, please.

ATT's $1000 bonus to 200,000 employees is barely 2 percent of what a company with 164 billion in revenues and 24 billion in net income will likely save over five years from the new tax bill - one-time bonuses are certainly welcomed by the recipients, but in the larger picture they should be viewed more as PR events than as meaningful sharing of potential tax savings.

Sun, 01/14/2018 - 7:57pm

Mr. Austin must be absolutely dumbfounded that the industrial revolution occurred without the benefit of government coordination and leadership. How fortunate we are to have people such as himself and his Michigan Economic Center. It's all so simple of course. Just allocate $20 million to leverage one billion dollars of investment. Investment in what? I'm curious how " clear vision, state and local leadership and public policies that power innovation, business and job creation. " contribute to growth and prosperity. Did Jeff Bezos require any of this to create Amazon? Mr. Austin is an articulate fifth wheel.